Discussion:Cord blood banking

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Discussion Forum Index --> Basic Tax Questions --> Cord blood banking


Discussion Forum Index --> Tax Questions --> Cord blood banking

Jmangonecpa (talk|edits) said:

25 February 2010

Is cord blook banking a tax deduction i.e medical expense? It is not explicitly named by the IRS as either an included or excluded expense.

AEM CPA (talk|edits) said:

25 February 2010
Take the deduction, go to Tax Court, and find out for us.

KatieBrewer (talk|edits) said:

25 February 2010
Cord blood banking is an interesting approach to medical care that isn't fully contemplated in the Code. Unless there is some recent guidance (in the last few years), there is not a lot of clear guidance. I had this specific question come up as to reimbursement from a client's Sec 125 plan. We were able to articulate our position, and they eventually reimbursed my client. Sec 213 for a deduction for medical care, which is defined as for the "diagnosis, cure, mitigation, treatment, or prevention of disease...". Because cord blood banking is for the prospective cure or treatment of a future potential medical condition, it may seem to blur the lines of deductability. However, nothing in the code states that the cure or treatment must be for a currently existing issue. Instead of medical issue first then cure, cord blood banking changes up the order so it is cure first, then medical issue. Therefore, the fact that cord blood banking is for prospective issues, it does not mean it does not meet the plain language of Sec 213(d). As AEM says, go to Tax Court and find out. It is a squishy part of tax law, but a reasonable position.

AEM CPA (talk|edits) said:

25 February 2010
Of course, the issue will probably be clarified once it is shown to be effective or not. Nobody knows yet whether cord blood will be able to be used to treat any disease or illness.

Trillium (talk|edits) said:

25 February 2010
In March 2009, a bill was introduced to amend Sec. 213 to allow umbilical cord blood banking to be deductible and reimbursable by FSAs, HSAs, etc., effective for years beginning after 12/31/09, but it was referred to committee and hasn't moved since then. You can look up HR 1718 (111th congress) to see the details.

Taxea (talk|edits) said:

25 February 2010
Do you have time to fight the issue? I would wait until it has been added to the code.

Death&Taxes (talk|edits) said:

26 February 2010
Would we not be throwing out a lot of 'Wellness' programs? They are not in treatment of any specific illness but are for prevention, and the insurance companies love to talk about them.

AEM CPA (talk|edits) said:

27 March 2010
Those wellness programs have been demonstrated to have a beneficial effect on the health of participants. No such demonstration has yet been made regarding cord blood. (I believe it will be demonstrated in the years to come, but as far as taking a deduction, I am not comfortable doing it.)

AEM CPA (talk|edits) said:

27 March 2010
That being said, if a client REALLY wanted to take the deduction, I would advise him that the IRS hasn't stated that it's deductible, but I think I would still sign the return.

Kevinh5 (talk|edits) said:

15 November 2010
Info 2010-0017 says "NO" to taking this expense as a medical deduction.

Cottcpa (talk|edits) said:

15 November 2010
by the time we get an answer from Congress your client probably won't need the adult stem cells from the cord blood......with the advancements in human cell reprogramming and synthetic biology, it won't be long before science is able to take a skin cell from your arm and create whatever organ or tissue your body needs.

AEM CPA (talk|edits) said:

15 November 2010
They gave themselves an out by saying that if the blood is being banked to treat some "existing or imminently probable disease", it may be deductible. For instance, the parents of a baby born with a congenital problem or an extreme preemie might qualify.

Cottcpa (talk|edits) said:

15 November 2010
wow that's an interesting point. Will be interesting to see how "imminently probable" evolves as genetic testing becomes more common at the consumer level (i.e., 23andme.com).

Actionbsns (talk|edits) said:

15 November 2010
:"...However, banking cord blood as a precaution to treat

a disease that might possibly develop in the future does not satisfy the existing legal standard that at a minimum a disease must be imminently probable.

We understand that you have proposed legislation, H.R. 1718, the Family Cord Blood Banking Act, that would allow a medical expense deduction for the costs of all umbilical cord blood banking services. Such a statutory change to section 213 would provide greater certainty about the deductibility of expenditures for umbilical cord blood banking services."

Kevin, it seems that last paragraph muddies the waters on a clear no. It seems to leave the door open to be determined at the legislative level. Kind of a "stay tuned" end to the decision.

Kevinh5 (talk|edits) said:

15 November 2010
well, of course Congress can change the law. The IRS was just interpreting what the law is today without such legislation. That's the way all tax laws are: if Congress doesn't like them, they can change them.

Jtdcpa (talk|edits) said:

15 November 2010
I am thinking this could be considered a form of health insurance. Deduct.

AEM CPA (talk|edits) said:

15 November 2010
As I said originally, take the deduction, go to Tax Court, and find out for us. The letter from the Office of the Chief Counsel makes the IRS position pretty clear, but that doesn't mean it would hold up. Of course, if it were the intent of Congress to allow a deduction for this, they could very easily make it so by passing HR 1718. They haven't.

JrEA (talk|edits) said:

15 November 2010
The expense for cord blood banking is only $2100/year(I got a policy with bells and whistles for my son this past spring). I thought a taxpayer can deduct only the amount by which the total MEDICAL CARE expenses for the year exceed 7.5% of their AGI. I would say it's not worth the red flag it may create with IRS.

I'm new here and I love this forum. You guys crack me up. =)

AEM CPA (talk|edits) said:

15 November 2010
Presumably a family with a newborn will have other medical expenses besides cord blood banking fees which would contribute toward meeting the 7.5% threshold. If a family has already met that threshold or is close, cord blood banking fees could be partially or entirely deductible were it a deductible expense per se.

Szptax (talk|edits) said:

15 November 2010
I wouldn't take the deduction because it isn't specifically allowed, however... the banking of cord blood for the treatment of a later disease, unless the banking fails, will surely be able to ameliorate some condition. After all, we all will become ill at some time. Further it could be for both the prevention and treatment of disease. Once it is determined that you have a particular gene found to be linked to certain cancers and other diseases, it could be argued that banking was for the later treatment of said disease. This is why people bank the cord blood, otherwise what's the point? Its "health insurance" at a biological level.

AEM CPA (talk|edits) said:

15 November 2010
There's no scientific consensus yet that cord blood will be able to be used effectively to treat anything. At this point, it's promising, so people are willing to gamble and spend the money because it can't hurt anything (except your bank account) even if it's not effective. And as we all know, net gambling losses are not deductible.

Szptax (talk|edits) said:

18 November 2010
http://www.cnn.com/2010/HEALTH/11/18/umbilical.cord.public.banks/index.html?hpt=T2

Szptax (talk|edits) said:

20 December 2010
http://www.msnbc.msn.com/id/21134540/vp/40749450#40749450

Kevinh5 (talk|edits) said:

20 December 2010
SZP, that video is of a cord blood transplant (from another donor), not the actual banking of one's own cord blood.

Szptax (talk|edits) said:

21 December 2010
Kevin5 - so what? It supports the use of cord blood for medical treatment, something that was discussed as part of this discussion. AEM specifically said that there was "no consensus yet that cord blood will be able to be used effectively to treat anything".

Kevinh5 (talk|edits) said:

21 December 2010
and its use was so highly unusual and novel that it made the news. Perhaps this success will lead to more experimentation with it though.

Szptax (talk|edits) said:

21 December 2010
There are plenty of treatments once considered experimental that are now commonplace, and no-one questions the use of improved less invasive techniques. Is a laser not a piece of medical equipment because it hasn't been used for a particular procedure before? There are medicines that were tested on adults that are given to children not specifically . Does that preclude it from being medical treatment? I found this link just below an article about non-medicine therapies for ADHD. ADHD isn't novel or unusual.

As I said, I would not consider cord banking to be a medical expense for sch A, but that does not mean it has no medical value, or that it won't be a sch A medical expense in the future.

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